It’s a familiar scene in any hotel management meeting. The General Manager looks at the monthly report and smiles. “Great news, team! Our average occupancy was 78%, and RevPAR hit $150. We’re right on budget.” Everyone nods, relieved to have hit their numbers.
NB: This is an article from Demand Calendar
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However, as the meeting wraps up, the feeling doesn’t align with the data. Why is the team still scrambling? Why does the restaurant feel dead mid-week, and why was the final profit still below its full potential?
That “good” average you just celebrated is hiding a costly truth. For hoteliers, relying on averages to drive business isn’t only inaccurate but also a form of mismanagement that leaves a substantial amount of money on the table. The key to unlocking your hotel’s true profit potential isn’t in that single average number, but in understanding its daily distribution.
The “Comfortable Lie”: How Averages Hide the Truth
The problem with averages is that they flatten reality. They hide the dangerous valleys and the lucrative peaks, lulling you into a false sense of security. Here’s how it breaks down.
Averages Hide Problems (The Valleys)
An “average” occupancy of 70% for the month might look fine on a spreadsheet. But that “average” could be 95% occupancy on Fridays and Saturdays (driven by sold-out, low-rate leisure bookings) and a disastrous 45% on Mondays and Tuesdays.
The 70% average makes you complacent. It masks the critical problem: your 45% occupancy “valley.” On those days, your fixed costs, staffing, utilities, and property are eating you alive. Since the average looks acceptable, no one is actively addressing the mid-week demand, and you continue to lose profit day after day.
Averages Hide Opportunities (The Peaks)
The same lie works in reverse, costing you even more. Let’s say your “average” RGI (Revenue Generation Index) is 105, meaning you’re “beating” your compset. But what really happened?
On the biggest concert night of the year, unconstrained demand was through the roof. You sold out three weeks in advance at a rate only slightly above your competitors. You hit 100% occupancy, but your RGI on that specific night was only 90. You left a considerable amount of money on the table. The demand could have supported a rate 30% higher, but you sold out too early and at too low a price.
The “average” RGI of 105 for the month completely masks this massive missed opportunity.
This applies to all your KPIs. A “good” average TRevPAR (Total Revenue Per Available Room) can be skewed by one stellar weekend wedding, hiding the fact that your mid-week corporate guests aren’t spending a dime outside their room rate.
